Wednesday, February 28, 2018

A failure of due diligence

Last week the government announced the first recipients of its billion dollar a year regional development fund. But it turns out that in addition to funding railway lines and sawmills, they're also funding alleged fraudsters:

A flagship Government programme is funding a project tied to a businessman who has been referred to the Serious Fraud Office.

Among the projects by the Government's new regional development programme is a $350,000 feasibility grant to investigate whether a waste-to-energy plant can be built on the West Coast, Radio New Zealand reports.

The scheme will involve burning rubbish from around the country to generate electricity.

The company behind the scheme is Renew Energy and one of its major shareholders is Gerard Gallagher.

An investigation last year, prompted by a Stuff investigation, found Gallagher and another former official from the Canterbury Earthquake Recovery Authority (Cera) tried to use their positions for their own financial gain.

The State Services Commission found the pair committed "serious misconduct" when they set up a private company in an attempt to leverage off business deals connected to their Cera jobs. They were referred to the SFO.

This is an appalling failure of due diligence by MBIE. While there's nothing suggesting that the project isn't real, handing over wads of cash to people to people who resigned from public positions over corrupt behaviour found to be "serious misconduct" and are currently under investigation is Not A Good Look. I expect the grant will be withdrawn, but the fact it was offered has got the programme off to a very bad start.